ResMed Inc. Earnings Cheat Sheet: Margins Shrink as Net Income Drops

Rising costs hurt ResMed Inc. (NYSE:RMD) in the first quarter as profit dropped from a year earlier. ResMed is a developer, manufacturer and distributor of medical equipment for treating, diagnosing and managing sleep-disordered breathing and other respiratory disorders.

Investing Insights: Amazon.com has a Stock Chart Technical Analysts Dream About.

ResMed Earnings Cheat Sheet for the First Quarter

Results: Net income for the medical appliances and equipment company fell to $50.5 million (33 cents per share) vs. $56.7 million (36 cents per share) a year earlier. This is a decline of 10.9% from the year earlier quarter.

Revenue: Rose 11.6% to $314.8 million from the year earlier quarter.

Actual vs. Wall St. Expectations: RMD fell short of the mean analyst estimate of 35 cents per share. It fell short of the average revenue estimate of $326.3 million.

Quoting Management: Peter C. Farrell Ph.D, chairman and chief executive officer, commented, “Revenue in Americas increased by 9% to $169.3 million over the prior year’s quarter. Revenue outside Americas increased by 15% to $145.5 million over the prior year’s quarter, or a 7% increase on a constant currency basis. Worldwide, our growth in flow generators was mainly driven by sales of the S9 AutoSet and VPAP Adapt SV. Patient interface sales continue to perform strongly in all regions. Operating profit for the September quarter was $60.9 million and cash flow from operations was a record $89.5 million, demonstrating excellent operating performance. During the quarter, we also repurchased 4.4 million shares, at a cost of $124.7 million, as part of our ongoing capital management program.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 13.3%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 17.3% from the year earlier quarter.

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the fourth quarter of the last fiscal year, net income rose 10% from the year earlier, while the figure increased 9.2% in the third quarter of the last fiscal year, 27.1% in the second quarter of the last fiscal year and 34.7% in the first quarter of the last fiscal year.

Gross margin shrank 2.9 percentage points to 58.8%. The contraction appeared to be driven by increased costs, which rose 20% from the year earlier quarter while revenue rose 11.6%.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 39 cents versus a mean estimate of net income of 36 cents per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from 38 cents a share to 37 cents over the last ninety days. The average estimate for the fiscal year is $1.54 per share, down from $1.56 ninety days ago.

Competitors to Watch: Allied Healthcare Product (NASDAQ:AHPI), Masimo Corporation (NASDAQ:MASI), Electromed, Inc. (NASDAQ:ELMD), Medtronic, Inc. (NYSE:MDT), Dynatronics Corporation (NASDAQ:DYNT), Thermo Fisher Scientific Inc. (NYSE:TMO), Covidien plc (NYSE:COV), Dehaier Medical Systems Ltd (NASDAQ:DHRM), and CareFusion Corporation (NYSE:CFN).

Investing Insights: Amazon.com has a Stock Chart Technical Analysts Dream About.

(Source: Xignite Financials)

 

More from The Cheat Sheet